China credits $2.3 billion loan to State Bank of Pakistan

Pakistani Finance Minister Miftah Ismail said on Friday that a loan of $2.3 billion from a Chinese consortium of banks had been credited to the central bank’s account.

Taking to Twitter, Ismail wrote, “I am pleased to announce that Chinese consortium loan of RMB 15bn (roughly USD 2.3 bn) has been credited into State Bank of Pakistan (SBP) account today, increasing our foreign exchange reserves.”

To cope with country’s dwindling cash reserves, Ismail earlier said that a loan of $2.3 billion from a Chinese consortium of banks to Pakistan was expected within a “couple of days”.

Notably, a Chinese consortium of banks and Pakistan had signed a $2.3 billion loan facility agreement earlier. In an update on the agreement, on Wednesday, Pakistan’s finance minister Miftah Ismail said that cash inflow under the loan agreement is expected within days.

Taking to Twitter, Ismail had written, “The Chinese consortium of banks has today signed the RMB 15 billion (~$2.3 billion) loan facility agreement after it was signed by the Pakistani side yesterday. Inflow is expected within a couple of days. We thank the Chinese government for facilitating this transaction.”

Foreign Minister of Pakistan Bilawal Bhutto Zardari wrote on social media, “Grateful to President Xi Jinping, Foreign Minister Wang Yi and the people of China. Chinese consortium of banks has today signed the RMB 15 billion loan facility agreement, the people of Pakistan are grateful for the continued support of our all-weather friends.”

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Pakistan is in a deep financial crisis, and this development comes after reports emerged of Pakistan reaching an understanding with the International Monetary Fund (IMF), as per the media outlet. Ismail said that after a visit by Foreign Minister Bilawal Bhutto-Zardari and follow-up discussions by Prime Minister Shehbaz Sharif with Prime Minister Li Keqiang, the Chinese side had not only agreed to roll over the amount but also done so at a cheaper interest rate of 1.5 per cent plus Shanghai Interbank Offered Rate (Shibor) instead of earlier 2.5 per cent plus Shibor.

However, in Wednesday’s announcement, Ismail did not elaborate further on the agreement with the consortium.

• Pakistan